QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period
from to

Commission file number 814-00861

Fidus Investment Corporation

(Exact Name of Registrant as Specified in its Charter)

Maryland

27-5017321

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

1603 Orrington Avenue, Suite 1005

Evanston, Illinois

60201

(Address of Principal Executive Offices)

(Zip Code)

(847) 859-3940

(Registrants telephone number, including area code)

n/a

(Former name, former
address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes ☐ No ☐

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer,
accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐ (Do not check if a smaller reporting company)

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2017, the Registrant had outstanding 22,457,576 shares of common stock, $0.001 par value.

Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any, as of March 31, 2017. Generally, payment-in-kind interest can be paid-in-kind or all in cash.

(e)

The investment bears interest at a variable rate that is determined by reference to one-month LIBOR, which is reset monthly. The interest rate is set as one-month LIBOR + 11.5% and is subject to a 12.5% interest rate floor. The Company has provided the interest rate in effect as of March 31, 2017.

Investment is held by a wholly-owned subsidiary of the Company, other than the Funds.

(h)

The entire commitment was unfunded at March 31, 2017. As such, no interest is being earned on this investment.

(i)

Investment pledged as collateral for the Credit Facility and, as a result, is not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Companys obligations
under the Credit Facility (see Note 6 to the consolidated financial statements).

The portion of the investment not held by the Funds is pledged as collateral for the Credit Facility and, as a result, is not directly available to the creditors of the Company to satisfy any obligations of the Company
other than the Companys obligations under the Credit Facility (see Note 6 to the consolidated financial statements).

(k)

As defined in the 1940 Act, the Company is deemed to be an Affiliated Person of this portfolio company because it owns 5% or more of the portfolio companys outstanding voting securities or it has the
power to exercise control over the management or policies of such portfolio company. Transactions in which the issuer was an Affiliated Person are detailed in Note 3 to the consolidated financial statements.

(l)

Warrants entitle the Company to purchase a predetermined number of shares of common stock, and are non-income producing. The purchase price and number of shares are subject to
adjustment under certain conditions until the expiration date, if any.

(m)

Investment in portfolio company that has sold its operations and is in the process of winding down.

(n)

The investment bears interest at a variable rate that is determined by reference to three-month LIBOR, which is reset quarterly. The interest rate is set as three-month LIBOR + 8.8% and is subject to a 1.0% LIBOR
interest rate floor. The Company has provided the interest rate in effect as of March 31, 2017.

(o)

Investment was on non-accrual status as of March 31, 2017, meaning the Company has ceased recognizing interest income on the investment.

Rate includes the cash interest or dividend rate and paid-in-kind interest or dividend rate, if any, as of December 31, 2016.
Generally, payment-in-kind interest can be paid-in-kind or all in cash.

(e)

The investment bears interest at a variable rate that is determined by reference to one-month LIBOR, which is reset monthly. The interest rate is set as one-month LIBOR + 11.5% and is subject to a 12.5% interest rate floor. The Company has provided the interest rate in effect as of December 31, 2016.

Investment is held by a wholly-owned subsidiary of the Company, other than the Funds.

(h)

The entire commitment was unfunded at December 31, 2016. As such, no interest is being earned on this investment.

(i)

Investment pledged as collateral for the Credit Facility and, as a result, is not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Companys obligations
under the Credit Facility (see Note 6 to the consolidated financial statements).

(j)

The portion of the investment not held by the Funds is pledged as collateral for the Credit Facility and, as a result, is not directly available to the creditors of the Company to satisfy any obligations of the Company
other than the Companys obligations under the Credit Facility (see Note 6 to the consolidated financial statements).

(k)

As defined in the 1940 Act, the Company is deemed to be an Affiliated Person of this portfolio company because it owns 5% or more of the portfolio companys outstanding voting securities or it has the
power to exercise control over the management or policies of such portfolio company. Transactions in which the issuer was an Affiliated Person are detailed in Note 3 to the consolidated financial statements.

(l)

Warrants entitle the Company to purchase a predetermined number of shares of common stock, and are non-income producing. The purchase price and number of shares are subject to
adjustment under certain conditions until the expiration date, if any.

(m)

Investment in portfolio company that has sold its operations and is in the process of winding down.

(n)

The debt investment continues to pay interest, including the default rate, while the portfolio company pursues refinancing options.

Fidus Investment Corporation, a Maryland corporation (FIC, and together with its subsidiaries, the Company), was formed
on February 14, 2011 for the purposes of (i) acquiring 100% of the limited partnership interests of Fidus Mezzanine Capital, L.P. and its consolidated subsidiaries (collectively, Fund I) and 100% of the membership interests of
Fund Is general partner, Fidus Mezzanine Capital GP, LLC (FMCGP), (ii) raising capital in an initial public offering that was completed in June 2011 (the IPO) and (iii) thereafter operating as an externally
managed, closed-end,non-diversified management investment company, within the meaning of the Investment Company Act of 1940, as amended (the 1940 Act), that
has elected to be regulated as a business development company (BDC) under the 1940 Act.

On June 20, 2011, FIC acquired
100% of the limited partnership interests in Fund I and 100% of the equity interests in FMCGP, in exchange for 4,056,521 shares of common stock in FIC (the Formation Transactions). Fund I became FICs wholly-owned subsidiary,
retained its license to operate as a Small Business Investment Company (SBIC), and continues to hold investments and make new investments. The IPO consisted of the sale of 5,370,500 shares of the Companys common stock, including
shares purchased by the underwriters pursuant to their exercise of the over-allotment option, at a price of $15.00 per share resulting in net proceeds of $73,626, after deducting underwriting fees and commissions and offering costs totaling $6,932.

The Company provides customized debt and equity financing solutions to lower middle-market companies. Fund I commenced operations on
May 1, 2007, and on October 22, 2007, was granted a license to operate as a SBIC under the authority of the U.S. Small Business Administration (SBA). On March 29, 2013, the Company commenced operations of a second
wholly-owned subsidiary, Fidus Mezzanine Capital II, L.P. (Fund II), and, on May 28, 2013, was granted a second license to operate Fund II as an SBIC. Collectively, Fund I and Fund II are referred to as the Funds. The
SBIC licenses allow the Funds to obtain leverage by issuing SBA-guaranteed debentures (SBA debentures), subject to the issuance of leverage commitments by the SBA and other customary procedures. As
SBICs, the Funds are subject to a variety of regulations and oversight by the SBA under the Small Business Investment Act of 1958, as amended (the SBIC Act), concerning, among other things, the size and nature of the companies in which
they may invest and the structure of those investments.

Fund I has also elected to be regulated as a BDC under the 1940 Act. Fund II is
not registered under the 1940 Act and relies on the exclusion from the definition of investment company contained in Section 3(c)(7) of the 1940 Act. In addition, for federal income tax purposes, the Company elected to be treated as a regulated
investment company (RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code), commencing with its taxable year ended December 31, 2011.

The Company pays a quarterly base management fee and an incentive fee to Fidus Investment Advisors, LLC (the Investment Advisor)
under an investment advisory agreement (the Investment Advisory Agreement). The initial investment professionals of the Investment Advisor were previously employed by Fidus Capital, LLC, who was the investment advisor to Fund I prior to
consummation of the Formation Transactions.

Note 2. Significant Accounting Policies

Basis of presentation: The accompanying consolidated financial statements of the Company have been prepared in accordance with generally
accepted accounting principles in the United States of America (GAAP) pursuant to the requirements for reporting on Form 10-Q, Accounting Standards Codification (ASC) 946, Financial
Services  Investment Companies (ASC 946), and Articles 6 or 10 of Regulation S-X. In the opinion of management, the consolidated financial statements reflect all adjustments and
reclassifications that are necessary for the fair presentation of financial results as of and for the periods presented. Certain prior period amounts have been reclassified to conform to the current period presentation. The current periods
results of operation are not necessarily indicative of results that ultimately may be achieved for the year. Therefore, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes
thereto for the year ended December 31, 2016.

Use of estimates: The preparation of the consolidated financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation: Pursuant to Article 6 of Regulation S-X and ASC 946, the Company will generally
not consolidate its investments in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. As a result, the consolidated financial statements of the
Company include only the accounts of the Company and its wholly-owned subsidiaries, including the Funds. All significant intercompany balances and transactions have been eliminated.

Investment risks: The Companys investments are subject to a variety of risks. These risks may include, but are not limited to the
following:



Market risk - Market risk represents the potential loss that can be caused by a change in the fair value of the financial instrument due to market changes.



Credit risk - Credit risk represents the risk that the Company would incur if the counterparties failed to perform pursuant to the terms of their agreements with the Company.



Liquidity risk - Liquidity risk represents the possibility that the Company may not maintain sufficient cash balances or may not have access to sufficient cash to meet loan and other commitments as they become
due.



Interest rate risk - Interest rate risk represents the likelihood that a change in interest rates could have an adverse impact on the fair value of an interest-bearing financial instrument.



Prepayment risk - Certain of the Companys debt investments allow for prepayment of principal without penalty. Downward changes in interest rates may cause prepayments to occur at a faster than expected
rate, thereby effectively shortening the maturity of the debt investments and making the instrument less likely to be an income producing instrument.

Fair value of financial instruments: The Company measures and discloses fair value with respect to substantially all of its financial
instruments in accordance with ASC Topic 820  Fair Value Measurements and Disclosures (ASC Topic 820). ASC Topic 820 defines fair value, establishes a framework used to measure fair value, and requires disclosures for fair
value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs. See Note 4 to the consolidated financial statements for further discussion regarding the fair value
measurements and hierarchy.

Investment classification: The Company classifies its investments in accordance with the requirements
of the 1940 Act. Under the 1940 Act, Control Investments are defined as investments in those companies where the Company owns more than 25% of the voting securities of such company or has rights to maintain greater than 50% of the board
representation. Under the 1940 Act, Affiliate Investments are defined as investments in those companies where the Company owns between 5% and 25% of the voting securities of such company. Non-Control/Non-Affiliate Investments are those that neither qualify as Control Investments nor Affiliate Investments.

Segments: In accordance with ASC Topic 280  Segment Reporting, the Company has determined that it has a single reporting
segment and operating unit structure.

Cash and cash equivalents: Cash and cash equivalents are highly liquid investments with an
original maturity of three months or less at the date of acquisition. The Company places its cash in financial institutions and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits. The Company does
not believe its cash balances are exposed to any significant credit risk.

Deferred financing costs: Deferred financing costs
consist of fees and expenses paid in connection with the Credit Facility (as defined in Note 6) and SBA debentures. Deferred financing costs are capitalized and amortized over the term of the debt agreement using the effective interest method.
Unamortized deferred financing costs are presented as an offset to the corresponding debt liabilities on the consolidated statements of assets and liabilities.

Deferred equity offering costs: Deferred equity offering costs include registration expenses related to shelf filings, including
expenses related to the launch of the ATM Program. These expenses primarily consist of Securities and Exchange Commission (SEC) registration fees, legal fees and accounting fees incurred. These expenses are included in prepaid assets and
are charged to additional paid in capital upon the receipt of proceeds from an equity offering or charged to expense if no offering is completed.

Realized gains or losses and unrealized appreciation or depreciation on investments: Realized gains or losses on investments are
recorded upon the sale or disposition of a portfolio investment and are calculated as the difference between the net proceeds from the sale or disposition and the cost basis of the investment, without regard to unrealized appreciation or
depreciation previously recognized. Net change in unrealized appreciation or depreciation on the consolidated statements of operations includes changes in the fair value of investments from the prior period, as determined in good faith by the
Companys board of directors (the Board) through the application of the Companys valuation policy, as well as reclassifications of any prior period unrealized appreciation or depreciation on exited investments to realized
gains or losses on investments.

Interest and dividend income: Interest and dividend income is recorded on the accrual basis to the extent that we expect to collect such
amounts. Interest is accrued daily based on the outstanding principal amount and the contractual terms of the debt. Dividend income is recorded as dividends are declared or at the point an obligation exists for the portfolio company to make a
distribution, and is generally recognized when received. Distributions from portfolio companies are evaluated to determine if the distribution is a distribution of earnings or a return of capital. Distributions of earnings are included in dividend
income while a return of capital is recorded as a reduction in the cost basis of the investment. Estimates are adjusted as necessary when the relevant tax forms are received from the portfolio company.

Certain of the Companys investments contain a
payment-in-kind (PIK) income provision. The PIK income, computed at the contractual rate specified in the applicable investment agreement, is added to the
principal balance of the investment, rather than being paid in cash, and recorded as interest or dividend income, as applicable, on the consolidated statements of operations. Generally, PIK can be paid-in-kind or all in cash. The Company stops accruing PIK income when there is reasonable doubt that PIK income will be collected. PIK income is included in the Companys taxable income and, therefore,
affects the amount the Company is required to pay to shareholders in the form of dividends in order to maintain the Companys tax treatment as a RIC and to avoid corporate federal income tax, even though the Company has not yet collected the
cash.

When there is reasonable doubt that principal, interest or dividends will be collected, loans or preferred equity investments are
placed on non-accrual status and the Company will generally cease recognizing interest or dividend income. Interest and dividend payments received on non-accrual
investments may be recognized as interest or dividend income or may be applied to the investment principal balance based on managements judgment. Non-accrual investments are restored to accrual status
when past due principal, interest or dividends are paid and, in managements judgment, payments are likely to remain current.

Fee
income: Transaction fees earned in connection with the Companys investments are recognized as fee income. Such fees typically include fees for services, including structuring and advisory services, provided to portfolio companies. The
Company recognizes income from fees for providing such structuring and advisory services when the services are rendered or the transactions are completed. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as fee
income when earned.

The Company also typically receives loan origination or closing fees in connection with investments. Such loan
origination and closing fees are capitalized as unearned income and offset against investment cost basis on the consolidated statements of assets and liabilities and accreted into income over the life of the investment.

Warrants: In connection with the Companys debt investments, the Company will sometimes receive warrants or other equity-related
securities from the borrower (Warrants). The Company determines the cost basis of Warrants based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and Warrants received. Any
resulting difference between the face amount of the debt and its recorded fair value resulting from the assignment of value to the Warrants is treated as original issue discount (OID), and accreted into interest income using the
effective interest method over the term of the debt investment.

Partial loan sales: The Company follows the guidance in ASC 860,
Transfers and Servicing, when accountingfor loan participations and other partial loan sales. Such guidance requires a participation or other partial loan sale to meet the definition of a participating interest, as defined
in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest should remain on the Companys consolidated statement of assets and liabilities
and the proceeds recorded as a secured borrowing until the definition is met. Management has determined that all participations and other partial loan sale transactions entered into by the Company have met the definition of a participating interest.
Accordingly, the Company uses sale treatment in accounting for such transactions.

Income taxes: The Company has elected to be
treated as a RIC under Subchapter M of the Code, which will generally relieve the Company from U.S. federal income taxes with respect to all income distributed to stockholders. To maintain the tax treatment of a RIC, the Company is required to
timely distribute to its stockholders at least 90.0% of investment company taxable income, as defined by Subchapter M of the Code, each year. Depending on the level of taxable income earned in a tax year, the Company may choose to carry
forward taxable income in excess of current year distributions into the next tax year; however, the Company will pay a 4.0% excise tax if it does not distribute at least 98.0% of the current years ordinary taxable income. Any such carryover
taxable income must be distributed through a dividend declared prior to the later of the date on which the final tax return related to the year in which the Company generated such taxable income is filed or the 15th day of the 9th month following the close of such taxable year. In addition, the Company will be subject to federal excise tax if it does not
distribute at least 98.2% of its net capital gains realized, computed for any one year period ending October 31.

In the future, the Funds
may be limited by provisions of the SBIC Act and SBA regulations governing SBICs from making certain distributions to FIC that may be necessary to enable FIC to make the minimum distributions required to maintain the tax treatment of a RIC.

The Company has certain wholly-owned taxable subsidiaries (the Taxable Subsidiaries), each of which generally holds one or more of
the Companys portfolio investments listed on the consolidated schedules of investments. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that the Companys consolidated financial statements reflect the
Companys investment in the portfolio companies owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries is to permit the Company to hold equity investments in portfolio companies that are taxed as partnerships for U.S.
federal income tax purposes (such as entities organized as limited liability companies (LLCs) or other forms of pass through entities) while complying with the
source-of-income requirements contained in the RIC tax provisions. The Taxable Subsidiaries are not consolidated with the Company for U.S. federal corporate
income tax purposes, and each Taxable Subsidiary will be subject to U.S. federal corporate income tax on its taxable income. Any such income or expense is reflected in the consolidated statements of operations.

U.S. federal income tax regulations differ from GAAP, and as a result, distributions in accordance with tax regulations may differ from net
investment income and realized gains recognized under GAAP. Differences may be permanent or temporary. Permanent differences may arise as a result of, among other items, a difference in the book and tax basis of certain assets and nondeductible
federal income taxes. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

ASC Topic 740  Accounting for Uncertainty in Income Taxes (ASC Topic 740) provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in the consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Companys tax returns to determine whether
the tax positions are more-likely-than-not to be respected by the applicable tax authorities. Tax benefits of positions not deemed to meet the
more-likely-than-not threshold would be recorded as a tax expense in the current year. It is the Companys policy to recognize accrued interest and penalties related to uncertain tax benefits in income
tax provision, if any. There were no material uncertain income tax positions at March 31, 2017 and December 31, 2016. The Companys tax returns are generally subject to examination by U.S. federal and most state tax authorities for a
period of three years from the date the respective returns are filed, and, accordingly, the Companys 2013 through 2016 tax years remain subject to examination.

Distributions to stockholders: Distributions to stockholders are recorded on the record date with respect to such distributions. The
amount, if any, to be distributed to stockholders, is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, may be distributed at least annually, although the
Company may decide to retain such capital gains for investment.

The determination of the tax attributes for the Companys
distributions is made annually, and is based upon the Companys taxable income and distributions paid to its stockholders for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on
qualified dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign
corporations. The tax characterization of the Companys distributions generally includes both ordinary income and capital gains but may also include qualified dividends or return of capital.

The Company has adopted a dividend reinvestment plan (DRIP) that provides for the reinvestment of dividends on behalf of its
stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if the Company declares a cash dividend, the Companys stockholders who have not opted out of the DRIP at least three days prior to the
dividend payment date will have their cash dividend automatically reinvested into additional shares of the Companys common stock. The Company has the option to satisfy the share requirements of the DRIP through the issuance of new shares of
common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares are valued based upon the final closing price of the Companys common stock on a date determined by the Board. Shares purchased in
the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator before any associated brokerage or other costs. See Note 9 to the consolidated financial
statements regarding dividend declarations and distributions.

Earnings and net asset value per share: The earnings per share
calculations for the three months ended March 31, 2017 and 2016, are computed utilizing the weighted average shares outstanding for the period. Net asset value per share is calculated using the number of shares outstanding as of the end of the
period.

Stock repurchase plan: The Company has an open market stock repurchase program (the Program) under which the
Company may acquire up to $5.0 million of its outstanding common stock. Under the Program, the Company may, but is not obligated to, repurchase outstanding common stock in the open market from time to time provided that the Company complies
with the prohibitions under its insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market value and timing constraints.
The timing, manner, price and amount of any share repurchases will be determined by the Companys management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability, applicable legal
and regulatory requirements and other corporate considerations. On November 1, 2016, the Board extended the Program through December 31, 2017, or until the approved dollar amount has been used to repurchase shares. The

Program does not require the Company to repurchase any specific number of shares and the Company cannot assure that any shares will be repurchased under the
Program. The Program may be suspended, extended, modified or discontinued at any time. The Company did not make any repurchases of common stock during the three months ended March 31, 2017 or 2016.

Recent accounting pronouncements: In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) 2014-09,Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Revenue Recognition (Topic 605). Under the new
guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August
2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09, such that the guidance is effective for annual and interim reporting periods beginning
after December 15, 2017 and early application is permitted only for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the
impact this ASU will have on the Companys consolidated financial position or disclosures, but the Company does not expect the impact to be material.

In August 2016, the FASB issued ASU 2016-15,Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the
statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the
impact this ASU will have on the Companys consolidated financial position or disclosures.

In December 2016, the FASB issued ASU 2016-19,Technical Corrections and Improvements, which includes minor corrections and clarifications that affect a wide variety of topics in the Accounting Standards Codification, including an amendment to
Topic 820, Fair Value Measurement, which clarifies the difference between a valuation approach and a valuation technique when applying the guidance of that Topic. The amendment also requires an entity to disclose when there has been a change
in either or both a valuation approach and/or a valuation technique. The transition guidance for the Topic 820 amendment must be applied prospectively because it could potentially involve the use of hindsight that includes fair value measurements.
The guidance is effective for fiscal years, and interim periods within those fiscal years, for all entities beginning after December 15, 2016. The Company adopted this ASU effective January 1, 2017, and the amendments do not have a
material effect on the Companys consolidated financial position or disclosures.

Note 3. Portfolio Company Investments

The Companys portfolio investments principally consist of secured and unsecured debt, equity warrants and direct equity investments in
privately held companies. The debt investments may or may not be secured by either a first or second lien on the assets of the portfolio company. The debt investments generally bear interest at fixed rates, and generally mature between five and
seven years from the original investment. In connection with a debt investment, the Company also may receive nominally priced equity warrants and/or make a direct equity investment in the portfolio company. The Companys warrants or equity
investments may be investments in a holding company related to the portfolio company. In addition, the Company periodically makes equity investments in its portfolio companies through Taxable Subsidiaries. In both situations, the investment is
generally reported under the name of the operating company on the consolidated schedules of investments.

As of March 31, 2017, the
Company had active investments in 55 portfolio companies and residual investments in four portfolio companies that have sold their underlying operations. The aggregate fair value of the total portfolio was $536,602 and the weighted average effective
yield on the Companys debt investments was 12.9% as of such date. As of March 31, 2017, the Company held equity investments in 88.1% of its portfolio companies and the average fully diluted equity ownership in those portfolio companies
was 7.2%. As of December 31, 2016, the Company had active investments in 53 portfolio companies and residual investments in four portfolio companies that have sold their underlying operations. The aggregate fair value of the total portfolio was
$524,454 and the weighted average effective yield on the Companys debt investments was 13.1% as of such date. As of December 31, 2016, the Company held equity investments in 86.0% of its portfolio companies and the average fully diluted
equity ownership in those portfolio companies was 7.3%. The weighted average yield of the Companys debt investments is not the same as a return on investment for its stockholders but, rather, relates to a portion of the Companys
investment portfolio and is calculated before the payment of all of the Companys and its subsidiaries fees and expenses.The weighted average yields were computed using the effective interest rates for debt investments at cost as
of March 31, 2017 and December 31, 2016, including accretion of original issue discount and loan origination fees, but excluding investments on non-accrual status, if any.

Purchases of debt and equity investments for the three months ended March 31, 2017 and 2016, totaled $55,004 and $42,348, respectively.
Proceeds from sales and repayments, including principal, return of capital distributions and realized gains, of portfolio investments for the three months ended March 31, 2017 and 2016 totaled $47,746 and $31,581, respectively.

Investments by type with corresponding percentage of total portfolio investments consisted of the following:

Fair Value

Cost

March 31, 2017

December 31, 2016

March 31, 2017

December 31, 2016

Subordinated notes

$

372,367

69.5

%

$

363,646

69.4

%

$

375,113

72.8

%

$

364,543

72.9

%

Senior secured loans

78,480

14.6

79,758

15.2

82,753

16.0

83,426

16.7

Equity

74,047

13.8

70,849

13.5

50,749

9.8

45,207

9.0

Warrants

11,523

2.1

10,201

1.9

7,268

1.4

7,153

1.4

Royalty rights

185







185



185



Total

$

536,602

100.0

%

$

524,454

100.0

%

$

516,068

100.0

%

$

500,514

100.0

%

All investments made by the Company as of March 31, 2017 and December 31, 2016 were made in
portfolio companies headquartered in the U.S. The following table shows portfolio composition by geographic region at fair value and cost and as a percentage of total investments. The geographic composition is determined by the location of the
corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio companys business.

Fair Value

Cost

March 31, 2017

December 31, 2016

March 31, 2017

December 31, 2016

Midwest

$

165,774

30.8

%

$

166,412

31.6

%

$

153,848

29.8

%

$

153,456

30.7

%

Southeast

118,326

22.1

122,633

23.4

127,207

24.6

130,107

26.0

Northeast

104,113

19.4

98,470

18.8

99,020

19.2

94,481

18.9

West

76,716

14.3

73,703

14.1

64,845

12.6

63,717

12.7

Southwest

71,673

13.4

63,236

12.1

71,148

13.8

58,753

11.7

Total

$

536,602

100.0

%

$

524,454

100.0

%

$

516,068

100.0

%

$

500,514

100.0

%

As of March 31, 2017 and December 31, 2016, the Company had no portfolio company investments that
represented more than 10% of the total investment portfolio on a fair value or cost basis. As of March 31, 2017, the Company had debt investments in one portfolio company on non-accrual status, which had
an aggregate cost and fair value of $9,126 and $7,096, respectively. As of December 31, 2016, there were no investments on non-accrual status.

Schedule 12-14. Consolidated Schedule of Investments In and Advances To Affiliates

The table below represents the fair value of control and affiliate investments as of December 31, 2016 and any gross additions and
reductions made to such investments, as well as the ending fair value as of March 31, 2017.